Adjusted EPS amounted to 8.4 pence from 9.8 pence a year ago.

Sir Robert Finch, Chairman of Liberty International, commented: "Liberty International's net asset value per share (diluted, adjusted) has declined from 1,264p to 1,181p reflecting unsettled property market conditions in the UK."

The group reported a loss before tax of GBP335 million from a profit of GBP 293 million a year ago, after a deficit of GBP345 million on the revaluation and sales of investment properties.

Liberty International converted into a UK real estate investment trust (REIT) at the beginning of 2007.

Finch added that the group's prime UK regional shopping centres, which constitute some 75% of its business, continue to demonstrate their defensive merits with stable and resilient income streams and a 98.5% occupancy level.

"We have substantially expanded the business of Capital & Counties in recent years and these activities, including the Covent Garden Estate, Earls Court & Olympia, the Great Capital Partnership and our international businesses, continue to trade encouragingly", he said.

Looking ahead, he noted that the directors hold the view that further upward movement in valuation yields may well be experienced in 2008 as investment property markets remain unsettled in the light of ongoing uncertainty in financial markets and the general tightening of credit conditions.

It is currently too early to assess the full impact of these factors on the general performance of the UK economy and specifically for the property industry. In particular, rental levels are likely in the next few years to become an increasingly important factor in valuation performance, he said.

"In addition to the high-quality developments on which we are currently engaged, especially at St David's, Cardiff and Eldon Square, Newcastle, we are pursuing a broad range of active management initiatives and development prospects within our existing GBP 8.3 billion of investment properties."

He added that while such activity is subject to suitable market conditions, these prospects provide substantial scope for future organic growth.

"Liberty International has a business of exceptional quality, a high degree of specialisation on prime retail which constitutes around 90% of our assets, the benefits of scale and financial strength with a prudent debt to assets ratio and long-term fixed-rate debt.

"We remain confident in the ability of the company to respond to the more difficult conditions now prevailing in commercial property and retail markets," he said.